OICCI backs budget reforms, raises tax concerns

June 12, 2026 (MLN): The Overseas Investors Chamber of Commerce and Industry (OICCI) has extended a qualified welcome to the Federal Budget 2025-26, describing it as a budget showing restraint and structural ambition under significant fiscal pressure, while raising pointed concerns over the unchecked expansion of the informal economy and unresolved tax burdens on the formal sector.

Acknowledging the Federal Board of Revenue's collection of Rs13tr as a milestone, OICCI nonetheless noted that the bulk of the revenue was extracted from an already-compliant base of organised businesses, formal sector companies, and salaried taxpayers.

Of particular concern, the chamber flagged that the cash economy expanded from Rs9 trillion to Rs12tr in a single year a 33% surge calling it a measurable policy failure rather than an anomaly, according to the press release.

On the positive side, OICCI welcomed the partial rationalisation of the super tax, including its abolition for income slabs between Rs150m and Rs500m and a reduction from 10% to 8% for income above Rs500m.

The chamber also commended the cut in withholding and advance tax on export proceeds from 2% to 1.25%, the rationalisation of advance tax rates in the real estate sector with sections 236C and 236K reduced to flat rates of 2.75 percent and 1.5% respectively and targeted relief for the IT sector.

The proposed National Faceless Assessment Centre, aimed at reducing direct taxpayer-officer contact and curbing discretionary harassment, was noted as among the more significant structural announcements.

However, OICCI recorded two areas of serious concern. The budget contains no mention of restoring sales tax status or introducing zero-rating for oil refineries and marketing companies, a gap the chamber said is holding back between $6bn and $10bn in refinery sector investment.

The chamber was also critical of the budget's silence on the Minimum Tax on Turnover under Section 113 and the Alternate Corporate Tax under Section 153 of the Income Tax Ordinance, 2001, provisions it described as distortive for low-margin sectors since they levy tax on turnover rather than profit.

OICCI additionally called for a clear, time-bound mechanism for settling pending corporate income tax and sales tax refunds, which it said remain a material liquidity constraint on formal businesses, and urged inclusion of such a mechanism in the forthcoming Finance Bill as a signal of good faith to investors.

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